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Essay / Research Paper Abstract
This 3 page paper looks at the firm Hays Plc and uses a number of models to value the firm, including the dividend discount model, the free cash flow model, the investment and return approach and the use of a multiplier approach. The bibliography cites 3 sources.
Page Count:
3 pages (~225 words per page)
File: TS14_TEhaysval.rtf
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Unformatted sample text from the term paper:
of future revenue streams as well the value that may be gained by a sale. There are several general models that are accepted along with other models which may be
used in a more ad hoc basis. These can be considered in order to value Hays Plc. One of the most common
approaches is to use the dividend discount model. The rationale behind this model is that the value of a share should be calculated by reference to the current value of
future dividends. The idea is that the real value is not in the speculation of earnings and the way that the market behaves, that the best way to measure the
value of a stock should be by looking at the money it will produce. This is likely to produce less irrational returns than those that create the large swings in
stock valuations on the stock market (Howells and Bain, 2007). This is therefore a conservative valuing tool. The model is best used when there is a stock that is making
regular dividend payments, but it can be used for other companies; theoretically retained earnings should eventually become dividends (Howells and Bain, 2007). The equation for this is DPS(1) /
ERR-g = Value of stock, where DPS(1)is the dividends that are expected within one year, ERR is the expected rate of return, this is calculated by taking the
risk free rate and adding the market premium rate, and then multiplying the answer by the beta. The final input is the assumed growth rate for the dividends (g), this
is often assumed as equal to the long term growth rate in the economy, calculated by adding inflation to the real rate of growth in the GDP. Hays Plc have
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